Karma Police: Digital User Management in Online Music Stores

Karma Police: Digital User Management in Online Music Stores


‘It’s best not to mess with karma’

Steve Jobs


In February 2006, 16 year old Alex Ostrovsky from West Bloomfield, Michigan, USA, downloaded Coldplay’s single, ‘Speed of Sound’ from Apple’s online music store. Previously best known for its UK chart humiliation at the blue, reptilian hands of Crazy Frog, the song now achieved a new landmark as iTunes’ billionth sale. Apple CEO Steve Jobs was effusive about the sale’s significance claiming it represented both ‘a major force against internet piracy’ and ‘the future of music distribution as we move from CDs to the internet’ (BBC, 2006a).

Since its 2003 US launch iTunes has been remarkably successful, spearheading the development of a wide range of legal download stores all taking advantage of the popular rise of broadband and portable digital music players to produce a thriving mainstream legal online music culture. Whereas only a few years earlier the music industry had opposed digital distribution now music companies and retailers embraced the possibilities opened up by iTunes. As Steve Jobs suggests, this legal provision was partially intended as a response to peer-to-peer (P2P) piracy, representing the positive face of the industry’s campaign against file-sharing, trying to convince us that it could legally provide for our digital music needs. The negative face of this campaign was the accompanying assault on illegal digital music culture, and the industry’s employment of a range of tactics against file-sharing software companies, technologies and individuals. By 2003 the industry had realised that easily accessible and easy-to-use legal services made it easier to stigmatise and prosecute copyright-infringement by individuals and companies.

But this provision represented more than an attack on piracy: it also signalled the industry’s belated recognition of the advantages of online distribution. The main benefit was to allow the development of a new digital business model combining a return to traditional, competitive capitalistic practices (using proprietal formats and maximising profits through savings in physical production, distribution and sales) with new powers of control over the consumer and the rewriting of their de facto and de jure rights through the use of digital rights management (DRM) technologies. It is my argument that this represents a more significant and pernicious development than the more obviously aggressive legal tactics employed by the industry against file-sharers. Whereas law-suits aim to punish a minority and push consumers towards legal services, these services aim to fundamentally transform the entire mode of music consumption and produce a new consumer: one accepting the products and policies imposed by the industry, bound by licenses controlled in their own homes by their own hardware. Contemporary developments in DRM constitute, therefore, the most systematic attempt to monitor, control and direct the behaviour and enjoyment of consumers in the history of recorded music. As such, I will argue, the preferred industry term, ‘digital rights management’ should be replaced with ‘digital user management’ (DUM) as a more accurate description of the processes they employ.

In a 2003 presentation Steve Jobs invoked the spiritual benefits of buying from iTunes, claiming people liked the fact that ‘it’s not stealing. It’s good karma’. His background slide was blunter in its threat to file-sharers: ‘You’re stealing – It’s best not to mess with karma’ (Barkham, 2004b; Story, 2003). With its DRM extending consumer surveillance into the private sphere and with its legal teams ready to prosecute a 12 year old girl for copyright infringement the music industry was explicitly repositioning itself as the karma police for all music users. This post will explore the scope and implications of this policing of music consumption. It will begin by considering the rise of both illegal and legal digital music culture.


The Rise of Online Music


John Alderman’s 2001 book Sonic Boom traces the slow development of online music, from Lord and Patterson’s legal, musician-owned download site, the ‘Internet Underground Music Archive’, established in 1993, through to the closure of Napster in February 2001 (Alderman, 2001). He demonstrates how the music industry not only targeted illegal music sites, such as David Weekley’s early Stanford University-hosted MP3 site closed down in 1997, but also opposed all attempts to develop legal online music services, such as Liquid Audio, MP3.com and emusic; viewed the MP3 as a pirate format and instituted a lawsuit against the first commercial MP3 player, Diamond’s ‘Rio’ in 1998. The public, however, was more enthusiastic about digital music. By the late 1990s rising technological literacy, the use of computers as home stereos, cheaper copying technology, increasing familiarity with the MP3 format and easier access to online files ensured a slow take-up of the digital format. The launch of Napster in June 1999 – a site connecting users and facilitating the free sharing of music – was the tipping point. By the time the RIAA law-suit closed it down in February 2001 it had accumulated an estimated 26.4m – and possibly up to 40m – users (Lipsman, 2001).

In its place sprang up a new generation of P2P services such as Kazaa, Bearshare, Morpheus and Limewire that dispensed with a central server, directly connecting users through individually installed programs regularly updated with improved versions. By May 2003 Kazaa had become the internet’s most popular program being downloaded 230m times (BBC, 2003a) whilst by January 2006 the International Federation of Phonographic Industry (IFPI) estimated over 870m illegal files were available on P2P nets (BBC, 2006b). The music industry claims over $4.2bn worldwide lost to piracy (RIAA, 2006), blaming it for a 25% global fall in sales from 1999-2005 (Gibson, 2005a) and regularly citing research that file-sharers spend less on music (Adegoke, 2004; Gibson, 2005b; BBC, 2004a). The evidence, however, is equivocal, being contradicted by other file-sharing studies (Charman, 2004; Gibson, 2005c; BBC 2005a); by claims that poor and overpriced product or competition from other media such as cheaper DVDs and games might be to blame for the market, and even by more recent reports of increasing music sales (Charman, 2004; Hunter Gordon, 2005).

The music industry, however, continued to blame piracy for its problems and moved to tackle the new P2P networks, opening an RIAA lawsuit against Grokster and StreamCast (owners of Morpheus) in October 2001 and expanding this in July 2002 to include Kazaa (BBC, 2005b; 2002a). In 2005 it won a major US Supreme Court ruling against the companies that left the Betamax ruling on legal uses of copyright-infringing technologies intact but found the P2P services liable for seeking ‘to cause and profit’ from this infringement, forcing Grokster and Kazaa to transform their business models and pay reparations to the industry (BBC, 2005b; 2005c; 2006c; 2006d). The industry also opened a second front against piracy in September 2003 when it began targeting individual file-sharers, fining 12 year old Brianna LaHara $2000 for copyright infringement (Barkham, 2004a). By January 2006, 20 000 cases had been brought across the US, UK, France, Germany, Italy, Austria, Denmark, Finland, Iceland, Ireland, Japan, Netherlands, Switzerland, Sweden, Argentina, Singapore and Honk Kong (BBC, 2006b). In October 2006 another 8000 piracy cases were brought across 17 countries – now including Brazil, Mexico and Poland (BBC, 2006d) – whilst the industry has also targeted US University networks, P2P index servers, sites linking to free MP3s, devices enabling music sharing and music stores claiming to be evading royalties such as the Russian Allofmp3.com.

Despite this legal action, official analysts claim P2P network use has remained consistent or has even risen (BBC, 2005c; Hunter Gordon, 2005), whilst other attempts to bring down the networks, such as hiring Overpeer to flood them with ‘spoof’ fake files, have failed, inadvertently helping the evolution of P2P technologies as users migrated to more secure systems (Menneke, 2005). The industry’s attempt to prevent material from reaching P2P nets using copy-protection DRM on purchased CDs has also been problematic. Exposure has provoked considerable consumer hostility – such as in the UK 2001 release of Natalie Imbruglia’s White Lillies and the US November 2005 Sony ‘rootkit’ case, when its installation of cloaked files on users’ computers was discovered, leading to an expensive package of compensation for affected consumers (BBC, 2005d-g; 2006e).

The music industry has also pursued a strong publicity and propaganda campaign against piracy and, more recently, a related campaign to extend UK copyright beyond its 50 year limit (Jamieson, 2006). The appeals of aging musicians for their pensions, however, failed to convince the Gowers report in December 2006 to recommend copyright extension (Kennedy, 2006; Gowers, 2006). Finally the industry has also tried to extend its own legal powers. As well as threatening ISPs to help it identify file-sharing accounts (Marriner, 2006; Johnson and Arthur, 2006), in November 2005 it even tried to force the European Parliament to extend proposed anti-terror legislation to give it access rights to communications records currently reserved for Government investigations into terrorism and organised crime (Johnson, 2005).

All of this adds up, therefore, to a coordinated and aggressive legal campaign against illegal practices and all alternative digital music cultures that threaten the industry’s own interests. This is a campaign demonising infringers, treating purchasers of copy-protected CDs as potential criminals and finally equating file-sharers, like 12 year old Brianna, with Osama Bin Laden. Although the success of this policy to date is debateable the concomitant decision to develop competing legal online music stores has been far more successful.

Interviewed in 2005, Eric Nicoli, Chairman of EMI, was open about this dual music strategy: ‘our job is to make it more difficult as well as more dangerous to steal … But, more importantly, to make it easier and more convenient to buy’. ‘With hindsight’, he admitted, ‘we could and should have been faster’ as it wasn’t until the launch of iTunes ‘that a truly attractive legal alternative was available’ (Gibson, 2005d). By January 2005 the IFPI could claim the total number of legal downloaders now matched the number of illegal downloaders, with a 30m reduction in illegally available files over the previous year (Gibson, 2005e). As IFPI Chairman John Kennedy commented, ‘at long last the threat has become the opportunity’ (Gibson, 2005e).

The last time the industry had been so hopeful was in 1982 with the introduction of the CD (Millard, 1995:353). Industry cooperation and the open availability of agreed standards prevented a format war whilst its superior sound, features, durability and look made it a desirable, premium product, requiring the purchase of new hardware and one’s music collection and all future releases at similarly premium prices. The digitalisation of music would rebound upon the industry, however, with the spread of personal computing. The music industry failed to anticipate the use of the PC as a home stereo, the development and spread of cheap ripping technology and the take-off of networked computing allowing the swapping of music files. With the form and integrity of the CD breached in the home the music industry lost control of the consumption and dissemination of digital music. The industry response was slow. Tied to a physical business model with a heavy investment in physical production, distribution and retailing and with a centralised control over the format and its content it opposed innovation. The CD would remain the dominant format for the foreseeable future, it argued, justifying it’s faith by the broader public’s lack of interest in digital delivery and by the claim that it could not compete with the ‘free’ service offered by P2P nets.

The unexpected success of portable digital music players would change their minds. Interest in portable music had declined as more sensitive and bulkier CD players replaced cassette players. The new digital players, however, overcame these limitations, with their small size and storage of content on internal memory restoring and amplifying their portability. Their sleek design made portable music fashionable again and their huge capacity encouraged the accumulation of large collections, renewing and expanding interest in music. With the public eager for music to fill them the digital players the industry tried to ban in 1998 became a major new source of revenue.

The Apple ipod had been launched on 23rd October 2001, with its design and features overcoming initial scepticism to become successful. Windows compatibility and USB connectivity increased its appeal, as did clever marketing and a range of players and accessories, turning it into the contemporary, must-have gadget. It soon dominated the portable music player market, with worldwide sales increasing from 3m in 2003 to 35m by the end of 2005 and over 67.5m by the end of 2006 (Kahney, 2005; Unattributed, 2005a; 2005b). Apple’s move into music retailing with the April 2003 launch of the US iTunes Music Store was a logical step. As a technology company they had little interest in combating P2P piracy or even in music retailing but they realised that providing music in their own format in an integrated system would support ipod users and foster new unit sales.

Just as the ipod converted people into digital music users, so iTunes converted them into digital music purchasers, kick-starting online music retailing. In 2004 Mycokemusic, Napster, Sony Connect and easymusic all opened online stores; Wippit and OD2 (supplying MSN, MTV, Woolworths and Tesco) emerged as competitors, and Apple launched new stores for the UK, France and Germany. By September 2005 HMV and Virgin had joined the online market, demonstrating the increased pressure on the high-street. Apple’s early lead and tied-in ipod, however, made it the market leader, enjoying a 70% dominance of the US and UK markets (Gibson, 2005e).

Digital music retailing has been remarkably successful. IFPI figures show that in the year up to June 2005 global physical music sales fell by 6.3% whilst digital sales rose from $220m to $790m. By the end of the year they were worth $1.1bn rising from 1-2% of the music market in 2004 to 6%, almost offsetting the decline in physical format sales (Marriner, 2005, 2006; Unattributed, 2005a). The UK market experienced the fastest growth, rising from 5.7m songs sold in 2004 to 26m in 2005 (Marriner, 2006; Gibson, 2006a). In 2006 the market nearly doubled again with sales rising from $1.1bn to $2bn to constitute 10% of the music market (Allen, 2007). If technology companies have benefited from this – with over 60m portable music players being sold in 2005 (Marriner, 2006) – high street retailers such as Tower Records, Borders and HMV have been hard hit (BBC, 2005i; Finch, 2006). The pop single was thriving, however, with the UK integrating downloads into the charts from April 2005 (BBC, 2004b; 2005j). The end of BBC TV’s iconic Top of the Pops in July 2006 represented not a loss of interest in the single but only the contemporary impatience with a weekly run-down.

Head of EMI, Eric Nicoli, summarised the music industry’s new thinking in 2005 when he commented: ‘we want to allow people to access music however they want, whenever they want – as long as they pay for it’ (Gibson, 2005d). Rejecting its own history of close, centralised control over the production and consumption of music the industry now presented itself as embracing the new media era of on-demand distribution, individualised choice and personalised content, acceding to the public desire for an always-on, always-flowing digital experience, asking, in return, only for fair remuneration for the good of artists and the future of music. Thus, in its eagerness to please and serve, it saw itself as sharing that same good karma Steve Jobs promised the customer. The reality, however, was less philanthropic. The music industry’s conversion owed more to its recognition of the benefits of a new digital business model – one exploiting the economic potential of this new market space and the possibilities offered by new media to renegotiate the terms and conditions of ownership and police customer use.


The Digital Business Model


As Alderman argues, by the year 2000 many in the music industry feared they had lost control of their product. File-sharing technologies had reduced the marginal cost of finding and delivering music to ‘about zero’, potentially rendering the industry ownership of the product, its pressing plants, delivery trucks, warehouses and retail networks all obsolete. With the creation of the long dreamed-of, free ‘celestial jukebox’, it was claimed, the music industry ‘middleman’ might no longer be needed (Alderman, 2001, pp. 129-31).

Except it didn’t work out like that. Instead the music industry embraced networked computing as creating a new space and source of profit. Instead of an end to capitalism, therefore, what followed was a return to its most basic, laissez-faire form, with new online entrants aggressively competing for both maximum profits (through their pricing structures) and monopolistic position (through their use of proprietal formats)

Even in the physical world customers had long complained of industry overpricing, especially in the UK, and it took the rise of online retailers such as Amazon, Play and Ebay and supermarket price wars to drive down CD prices. High online pricing has also attracted complaints. As Hunter Gordon argues, ‘at 79p the cost of downloading is almost the same as buying a 12 track album, but without the box, artwork or that crucial sense of ownership’ (Hunter Gordon, 2005). In fact Apple’s £9.48 for a 12 track CD works out as more expensive than many high-street retailers with large box sets representing especially poor value (1). In December 2004 Apple’s pricing was referred to the European Commission by the UK Office of Fair Trading for charging UK customers 15% more than other European consumers (with France and Germany paying 68p a track and the USA paying 51p) and for preventing UK customers from buying from other sites unless they have a registered bank account in that country (Milmo, 2004). In June 2006 a UK All Parliamentary Internet Group report called for a DTI investigation into online pricing (BBC, 2006f), whilst the US Department of Justice launched an inquiry in March 2006 into record company online price-fixing (Johnson, 2006).

These high prices are in addition to already increased profit margins. Naughton breaks down the cost of production of a CD - with 12% going to the artist, 4% to the music publisher, 38% to the retailer, 8% to the manufacturer, 8% to the distributor and 30% to the record company – to argue that 54% of the costs go on physical production, distribution and retailing. ‘Selling music via the net … takes virtually all of these costs out of the operation’, he says, concluding that ‘the industry could sell albums online at half their current retail price and make the same returns’ (Naughton, 2005). Naughton’s figures may underestimate the industry costs of digitising and delivering tracks, but the broad thrust of his argument is defensible. Steve Jobs confirms that the record companies make more profit on a 99c download, licensed for 80c, ‘than when they sell on CD’ (Johnson, 2006) whilst Hunter Gordon claims that the record company’s share of revenue has risen from 31% of a CD to 61.5% of a download (Hunter Gordon, 2005). Cheaper prices might also have been expected based upon the poorer quality of the product sold. Apple and Napster both use 128 kilobit per second encoding (kbps), meaning that every second is represented by 128 kilobits which is 11 times less than a standard CD which typically uses 175 kilobyte encoding. Although quality loss might be expected due to the need to compress files for transmission, lossless formats such as the free, open-source FLAC (‘Free Lossless Audio Codec’) are available (FLAC, 2006).

As well as being more profitable, online retailing is also more convenient for the music industry, removing the cost and labour of producing plastic discs and inserts and transporting them over the country to be stacked in shops and sold over the counter. Taking advantage of new media’s attractive ‘pull’ model of consumption the music industry simultaneously transforms the customer into the shop-worker, serving themselves; the delivery driver, transporting the music to their PC, and the factory worker, producing their final product in storing the file or burning it to disc. All of this is, of course, at the customer’s own cost as they pay for the ISP connection, the hardware and the storage medium. This puts a more critical perspective on the contemporary valorisation of empowered new media users who, in this instance, provide an unwaged-slavery for the music industry. The glittering, always-on, free-flowing, point-and-click digital world of individual freedom and personalised choice hides the reality that today it is the digital user’s labour-power, rather than that of the factory and shop worker and delivery driver, that is put to use and ‘managed’ by industry.

Given the opportunities for increased profits online by selling higher-priced, higher-margin, poorer quality products to users who provide free labour for the industry, it’s no surprise that record companies and retailers are competing for a monopoly position in this new space. Hence most employ proprietal formats to ‘lock-in’ customers to one format, to their store and to their playback technology. Music is sold in specific codecs requiring specific computer media players whilst limiting the compatible portable players. iTunes songs are sold in the MPEG-4 AAC (Advanced Audio Coding) format only playable on Apple’s Quick Time media player and the ipod; Napster uses the protected WMA (Windows Media Audio) format playable on the Windows Media Player and portable players supporting protected WMA files, whilst the Sony store used its own ATRAC3 format only playable on Sony’s Connect computer player and Sony’s portable devices.

The use of proprietal formats to achieve a monopoly lock-in of consumers isn’t new, with format wars dating back to the beginning of the music industry. The early competition between cylinder and disc is representative here; a situation so complicated by difference in vertical and lateral cuts, cylinder sizes and grooves per inch that ‘if you bought a record made by one company, you were lucky if it played on the machine of another’ (Millard, 1995, pp. 125). Although consumer preferences and pressure for compatibility overcame the record companies’ monopolistic desires, restricting competition to sales of players and music catalogues the post-war era saw renewed competition. Format wars broke out between the 78 and the new vinyl microgroove long-player; between Columbia’s 33 1/3 rpm and RCA’s 45rpm LPs; between the LP and cassette tape; between these formats and the CD and between digital successors to audio tape such as Sony’s DAT and MD and Philips’ DCC. What we are seeing online, therefore, is merely a fracturing of the status quo established by the CD’s open availability and success and a return to format competition to maximise market share and profits. This is a risky strategy but the rewards for a successful monopoly are considerable. As Kahney says, iTunes opened up a virtual land-grab whose prize is the chance ‘to become the Microsoft of the digital entertainment era’ (Kahney, 2006).

But the music industry is not just exploiting the new online space and new technologies to return to traditional competitive capitalistic practices it is also exploiting these technologies to significantly extend these practices. In particular it is using digital rights management technology to extend its power over the consumer beyond the point-of-sale.

DRM technologies are technologies used to enforce pre-defined, company-specific policies controlling access to and use of digital content. Their use is ostensibly explained by the need to combat piracy and prevent copy-righted material finding its way onto P2P nets but the restrictions imposed go far beyond this representing an authoritarian attempt to dictate the conditions of an individual’s entire mode of interaction with legally purchased products. DRM, therefore, has no necessary relationship to the law. It enforces decisions made by private companies and often clashes with existing copyright law, removing or nullifying already-established consumer rights. Whilst industry attempts to employ DRM on purchased CDs has been controversial its use by nearly every online music store has ensured that the DRM so vigorously rejected on CDs is being willingly purchased on downloads (Webb, 2006). As well as the obvious limitations on hardware compatibility online DRM further restricts (1) the transferral and copying of music and (2) the ‘ownership’ of the content.

Apple’s iTunes uses its own ‘Fairplay’ DRM, incorporating an M4 container file with an encrypted AAC audio stream that can be decrypted with the right key by an authorised computer’s Quick Time media player. This enables a range of restrictions to be specified and technologically enforced. In particular, songs bought on iTunes and transferred onto an ipod cannot be transferred onto another computer (only songs saved as date files can be transferred, using an external hard drive). iTunes purchased music can be stored on an unlimited number of computers, though can only be played on up to five ‘authorised’ computers. Songs can be burned to CD an unlimited number of times but each ‘playlist’ can only be burned seven times.

Napster’s WMA DRM allows you to burn individual songs as often as you like but the same playlist can only be copied seven times and music can only be copied on up to three computers. Sony’s store generously imposes no limits on the number of times you may listen to purchased music on your computer - ‘unless clearly marked otherwise’ – but says ‘there are limits set by the copyright holders regarding the number of times you can make copies’ to CDs or portable devices. Information about these limits, however, is not available prior to purchase. Before its closure in July 2006 Mycokemusic took its catalogue from OD2, with its WMA DRM specifying that songs could be played an unlimited number of times on a licensed PC (with up to 3 licenses available to move music to newer hardware), although the number of times songs could be burned to CD or transferred to a portable device depended on ‘the rights allowed by the record label that owns the music content’. Typically one could burn to CD between three and ten times and transfer to a portable player between five and an unlimited number of times. Other OD2-served stores follow the same model.

Like the use of proprietal formats, however, restrictions on copying music aren’t new. Although consumers believe they have the right to ‘back-up’ music for personal use British copyright law has never allowed this. The consumer does not purchase the copyright in the content so all copying without the copyright holder’s permission infringes UK law (2). The music industry was forced to accept home-taping due to the legality of the technology and the impossibility of preventing it in the home (accepting instead a levy on blank cassettes for lost sales) but the opportunity offered by P2P nets for limitless, near-identical, rapid and free copying from a global jukebox made this situation intolerable, leading to new tactics against piracy. Whilst the industry has granted permission for consumers to transfer music from their own CDs to PCs and portable players (BBC, 2006g) restrictions on legal uses remain strong. The only UK ‘Fair Dealing’ exceptions are (in theory) for private study, criticism or review. In the US ‘Fair Use’ has a broader definition, allowing the private backing-up of music. The US 1992 Audio Home Recording Act made the production of first generation digital copies for non-commercial use legal, levying a tax on digital recorders and recordable media, although the act is outdated in failing to recognise PCs as digital recording devices.

If proprietal formats and copying restrictions are not new, what is new about the music industry’s strategy? Very simply, new technologies give the industry the ability to monitor and restrict the behaviour of the music consumer beyond the traditional point-of-sale. New media give the industry unprecedented access to the user’s home and the power to dictate and control their interaction with the purchased commodity.

Consider the question of monitoring. Physical stores could only monitor the number and location of sales whereas online stores can monitor individual purchasers and their ordering history. This is presented as beneficial to the customer, aiding better service, rather than a means to increase knowledge and profits. Sony’s store explicitly presents this service ideology claiming, ‘we use cookies to customise your experience and to better match your interests and preferences’ (Sony, 2006). Whilst this practice has become normalised online, occasionally fears of new media ‘snooping’ arise, such as criticism of the iTunes ‘ministore’ feature in January 2006for collecting sensitive information about the computer and the account (BBC, 2006h)

DRM technologies add to this monitoring power, allowing the industry, for example, to actually intercede in the user’s home to prevent copying. WMA DRM is representative here. Windows Media Rights Manager packages the digital file, encrypting it and locking it with a key stored in an encrypted licence that is distributed separately and that also contains information such as the URL where a licence can be acquired. When a user tries to play an encrypted file Windows Media Rights Manager silently sends the user to a licence clearing house where the licence is retrieved or offered for sale. The consumer can then play the file according to the rules or rights included in the licence – rules that specify the number of copies that can be made and perform the counting operations necessary to enforce this.

Domestically enforced limitations are, therefore, fundamentally changing the traditional concept of music ownership. Previously consumers came to believe that although they did not own the music’s copyright they owned the copy they had purchased and thus owned the de facto right to listen to, copy or dispose of its content as they wished. This de facto ownership was guaranteed by the fact that the industry had no knowledge of or control over the use of music beyond the point-of-sale. Now the industry can not only specify limits on copying but can write whatever arbitrary clauses they want into the music license. WMA DRM, for example, can specify exact start and end times for the availability if a file, the duration of access and counted operations such as the number of times it even may be listened to. DRM restrictions, therefore, remove de facto ownership of music from the legal customer, returning power and ownership to the copyright holder.

By extending the company’s power to dictate conditions of listening DRM therefore redefine the traditional concept of ownership. Napster, for example, sells songs on a subscription basis. Its basic £9.95 package allows users to stream ‘an unlimited number of full-length songs’ onto a PC, with the library being available on up to 3 PCs ‘for as long as you want to be a member’ (or, more accurately, for as long as you pay your membership). £14.95 brings an upgraded ‘Napster to go’ membership allowing the transferral of music onto compatible portable players although as soon as one’s membership payments stop one’s whole library of music – including that stored on the digital player – is deleted. Inbuilt DRM in the songs require the player to be regularly docked at a PC with a valid Napster account or the files will be rendered unplayable. Music is restored with the resumption of payments. Napster users who want to ‘own’ the music they listen to can pay an extra fee per track to purchase it though it comes with inbuilt DRM to limit copying. Thus although Napster claims ‘the songs and albums you buy are yours to keep forever’ (Napster, 2006) in effect ownership remains limited.

The music industry, therefore, is employing new business models and DRM technologies to impose an explicit or effective ‘rental’ model of consumption in which a sale only brings specified and limited listening rights decided by the company not law. Again, this is presented as a customer benefit. Napster, for example, likens their service to ‘an all-you-can-eat buffet restaurant’ where ‘you can try everything you want’, although the metaphor fails as few restaurants physically repossess your food after you’ve eaten it unless you pay them a monthly fee.

Although the industry phrase ‘digital rights management’ implies a managing of legal rights it actually has no necessary relationship to the law. The ‘rights’ managed are those created and granted by the industry not by law and their transformation of customer ownership often contradicts existing legal rights for its own benefit. Previously one could dispose of one’s musical property as one wished, for example by giving it away or lending it to another person. Windows DRM, however, prevents this form of sharing as ‘default rights may allow the consumer to play the digital media file on a specific computer’. Licenses, therefore, recognise specific players and are not transferable: 'If a consumer sends a packaged media file to a friend this friend must acquire her own license to play the digital media file. This PC-by-PC licensing scheme ensures that the packaged digital media file can only be played by the computer that has been granted the license key for that file.' (Windows, 2006b)

The right to sell one’s property on second-hand is also removed. In 2003 George Hotelling carried out ‘an experiment in property rights in the digital age’, attempting to sell a song purchased on iTunes under the US right of ‘first sale’ (Hotelling, 2003a). US copyright experts claim this right does not apply to digital goods although it hasn’t been tested in law and Apple, though reluctant, eventually allowed the sale as ‘impractical, though perhaps within someone’s rights’ (Fried and Hansen, 2003). The transaction, however, could only be accomplished with the transferral of Hotelling’s entire Apple account (Hotelling, 2003b). The situation is worse in the UK as copyright holders have more power over digital goods than they do physical ones. The UK record industry warning in June 2006 that the second-hand sale of digital players containing music was illegal may be understandable (as the seller can retain copies of the music so has lost nothing) but it nevertheless removes the right of first sale for digital music (BBC, 2006i).

Questions of long-term ownership are also raised by the regular upgrading of home and work PCs, laptops and portable players, all using up available licenses; the possibility of hardware or battery failure erasing one’s collection and the operability of file formats as purchased codecs may not be playable in the future and even in the short term might quickly become obsolete and unsupported. The long-term existence of licensing clearing houses and the stores themselves also cannot be taken for granted (as demonstrated by Mycokemusic’s closure in July 2006) and the question of how music might be inherited hasn’t been considered.

The music industry, however, continues to laud the benefits of DRM. WMA DRM says it supports business models ‘that provide customers with even greater access to protected audio and video content’ (Windows, 2006), ignoring the fact that customers don’t want protected content, whilst Napster claims it uses DRM ‘to make sure all the music you have is safe and protected’ (Napster, 2006); a claim that is true insofar as its is safe and protected from you. Brad Duea, President of Napster, says, ‘we actually view DRM as an enabling technology’, although his explanation of this – that customers can now ‘take all their music on the go’ – is completely meaningless (BBC, 2006j).

There are important elements of empowerment in online music retailing. Music now becomes a distribution-on-demand service, becoming playable within minutes, avoiding the inconvenience of journeying to physical outlets with limited stock. The individual is also empowered in their choice of music, bypassing industry and artist decisions about content and track order, being able to compile their own CDs and playlists. This may not be an explicit part of the user-generated, participative revolution of Web 2.0 (O’Reilly, 2005) but it is an important shift within the industry to decentralised, personalised, customer choice.

These forms of consumer empowerment, however, come at the cost of a return to capitalist practices whose drive for profit and market position do not benefit the digital customer and of the development of authoritarian levels of monitoring and control in the customer’s own home. What this adds up to, under the guise of increasing individual freedom and personal choice, is the systematic development of a new regime of digital user management (DUM). Though this simultaneous empowerment of and control over the consumer appears paradoxical, the two processes are historically connected.

The Frankfurt School recognised exactly this, using Marx’s analysis of commodity fetishism (Marx, 1954, pp. 76-8) to explain the effects of the emerging mass media and consumer society of the early-mid 20th century. For them the expanded sphere of consumption and entertainment that was ideologically presented by the system as a positive sphere of freedom, pleasure, individual fulfilment and reclaimed humanity represented instead an extension of alienation. Through the emerging culture industry capitalism profitably colonised leisure time, imposing the labour of consumption upon workers as a support for the economic system whilst flattering the consumer though the production of ‘pseudo-individuality’. The sphere of consumption and its seductive freedoms and amusements also functioned, therefore, as a means of social integration and control (Adorno and Horkheimer, 1997, pp. 137; 154).

Andrejevic develops this Frankfurtian approach in his study of the emerging online economy. He traces the development of the new world of ‘mass customisation’ out of the Fordist era of mass production they described, explaining how this new model presents itself as a positive refinement of that system, promising to use consumer feedback, participation and personalisation to overcome the impersonal standardisation that characterised its goods and services. However, if, ‘the promise on offer to consumers is increasing flexibility, convenience and control’ the reality, he says, ‘is that of the increased rationalisation of consumers’ (Andrejevic, 2004, pp. 35). The public, therefore, ‘willingly enter’ into a system of technological surveillance presented to them ‘as a mode of empowerment and self-expression’ (2004, pp. 14) that actually represents their own economic rationalisation and ‘digital enclosure’.

Whereas the original land enclosure movement led to the separation of work and leisure, he argues, new digital technologies complete the colonisation of free-time and the corporate control and enclosure of the individual, ensuring that ‘activities and transactions formerly carried out beyond the monitoring capacities of the internet are enfolded into its virtual space’ (2004, pp. 35). Whilst Andrejevic explains these processes in relation to the interactive economy of Reality-TV the same processes clearly function in digital music retailing. What this Frankfurtian approach usefully highlights, therefore, is the historical process by which the expansion oft the sphere of leisure, entertainment and individual consumer freedom is accompanied by an increasing colonisation of the free-time of workers, the transformation of their consumption into profitable labour for the economy and an increasing control over their lives, choices, behaviour and activities.

Commentators on contemporary technologies increasingly share this pessimistic analysis of the extension of corporate power over the lives of individuals. Lessig’s work on the importance of ‘code’ – on the underlying protocols and rules implemented in software that produce and govern our technologies – leads him to a similarly critical position on online commerce. In particular he highlights how the structure of the internet is being changed to aid businesses and make user behaviour more regulable, producing in the process new ‘architectures of control’ (Lessig, 1998; 1999). More recently the work of Galloway (2004), on the operation of digital media as structures of control; Lassica, (2005) on the corporate assault upon digital users and consumers (especially in the film industry), and Goldsmith and Wu (2006) on the extension of corporate and governmental control over the internet and digital media all points to similar concerns.

As we have seen, the embrace of individual choice and personalised content in online digital music retailing serves as a cover for the industry’s extension of their power over the consumer. Their monitoring and policing of the individuals use of and interaction with their product constitutes an unprecedented systematic programme of digital user management, one removing de facto and de jure consumer rights, extending their reach into the domestic sphere, controlling the user’s own hardware and redefining the traditional concept of ownership. Thus the music industry is successfully taking back control of their product from the consumers, using the same new media technologies that threatened their industry to extend their power and profits. Their model of digital user management, however, is not as secure as the industry would like.


The End of DRM?


Several forces are currently working against the industry’s attempt to control digital user behaviour. Firstly, the download sector isn’t yet dominant. P2P nets remain an important source of DRM-free music, as do CDs whose sales remain strong and which offer higher quality and often cheaper music than online stores. Secondly there is evidence of consumer resistance to downloading. Customers complain about the technical complexities, the cost and quality of the music, the limitations of the differing formats and the harsh DRM and its poor advertising online (3) and commentators have observed that downloads are failing to grow as fast as they could due to these tight industry controls (BBC, 2005k; Allen, 2006). The public themselves favour MP3s which most major companies refuse to use although the success of emusic and allofmp3.com shows there is a significant demand for DRM-free MP3 music. This consumer demand, however, has to date been insufficient to impact upon the current digital model.

The third force is resistance to restrictions on interoperability. The industry itself is split on this. The major record companies favour interoperability, believing that it will reduce Apple’s power, lead to an increase in music sales and allow the development of differential pricing. Apple’s competitors also favour interoperability to make themselves available to iTunes customers and ipod users. In June 2004 RealNetworks introduced their ‘Harmony’ technology allowing RealPlayer store users to play their songs on ipods leading Apple to accuse them of adopting ‘the tactics and ethics of a hacker’ and to implement patches to stop it (BBC, 2004c-d). In March 2006 French MPs drafted a law to force interoperability on iTunes France though in the end Apple’s implicit threat to withdraw from the French market forced a watering down of proposals (BBC, 2006k-m). More recently a Norwegian consumer ombudsman ruling against Apple’s lack of interoperability and legal campaigns in France and Germany have begun to force the issue again (Schofield, 2007).

The fourth disruptive force is hacker culture. Copy-protected CDs have frequently been cracked. In 2002 it was discovered, for example, that black marker pen or opaque tape on the CD would obscure the DRM data track, causing the CD to skip to the audio content (Leyden, 2002) whilst in October 2003 John ‘Alex’ Halderman published a paper explaining how the ‘shift’ key disabled the windows autorun feature that allowed SunnComms’s MediaMax CD copy-protection to install itself on a PC (Halderman, 2003). The next day SunnComm threatened a $10m lawsuit and prosecution under the US Digital Millennium Copy-right Act (DMCA), before public pressure forced a climb-down (Smith, 2003). As a result of these software problems many in the industry are looking to a hardware-side solution such as the ‘trusted computing’ initiative which would allow a greater control of the user’s computer or DVD player.

Online DRM is harder to crack. Apple’s is a notable exception as merely burning the tracks to CD removes their Fairplay restrictions. In November 2003 Jon (‘DVD Jon’(4)) Johansen released QTFairUse as an open-source programme circumventing Apple’s DRM and since then a variety of programmes such as Pymusique, PlayFair, Hymn and Jhymn have been released although Apple upgrades continually try to close down these hacks. In 2005 there were reports that Napster’s DRM was close to being hacked, although this would only strip DRM from already-purchased tracks (Slocombe, 2005) whilst in October 2006 Jon Johansen and DoubleTwist ventures announced they had reverse-engineered Apple’s Fairplay DRM and that they would be licensing the code to other digital media manufacturers to produce ipod-compatible players (BBC, 2006n). The industry is fighting these developments and has the law on its side. In the US the DMCA makes all attempts to circumvent technological measures designed to protect copyrighted works an offence. The fact that the DMCA even makes drawing on one’s own CD with a marker pen illegal is a remarkable example of how the concept of ownership is being transformed with digital goods.

The hacks that have been made available to date are not widely known and so the online stores are winning their war on piracy but this is a war that cannot be finally won. The music industry cannot guarantee that any protection they devise will not eventually be cracked or that this crack will not become popularly used. There remains hope here, therefore, that the industry programme of DUM will never be perfected.

The fifth force threatening the industry’s digital user management is economic competition. The online digital music industry is not a monolithic entity: there are significant divisions between the record companies (who own and license the music), the technology companies (manufacturing the software, the media players and the portable players) and the online retailers (where these are separate). These companies all have different business needs and priorities leading to conflicts within the industry. More significantly we can see that the two core elements of the digital business model itself – the return to laisser-faire competition and the use of DRM technologies to monitor and control the consumer – are working against each other. The industry would benefit most from an agreed set of standards governing interoperability and DRM. Although difficult to implement it would simplify, rationalise and improve the digital user experience and significantly expand the digital market whilst retaining – and even normalising – digital rights restrictions. Instead internal competition is chipping away at the existing structure. Abandoning DRM is beginning to be seen by record companies and online retailers as a means of gaining economic advantage over their rivals and some commentators such as Van Buskirk (2006) predict that this competition will lead to the end of DRM.

The first crack came in February 2007 when Steve Jobs called upon the major record companies to allow Apple to sell music without protection, claiming ‘DRMs haven’t worked and may never work to halt music piracy’ (Allen and Gibson, 2007). His call drew a sharp and dismissive response from Warner music who countered with the industry view that copyright protection was necessary but restrictions on interoperability of the kind Apple enjoyed, were not (Wray, 2007). Hence the surprise when EMI (and Apple) announced in April that EMI’s music would now be available (on iTunes and other stores) without DRM, fully interoperable and at a higher quality encoding. On UK iTunes the DRM-free music was offered as a premium service, with tracks costing 20p more than protected tracks, although full albums would cost the same to encourage sales (Gibson and Johnson, 2007; Johnson, 2007). Soon after, Microsoft announced that it would also open up the Zune and Zune Marketplace to EMI’s DRM-free music.

EMI’s decision was primarily economic. Rosenblatt describes it as ‘a lunge for near-term revenue’, with an ailing EMI hoping that increased music sales and the Apple deal would help solve recent financial problems and strengthen its position in regard to Warner takeover speculation. Apple’s benefits were clearer. As well as the Norwegian ruling Apple were also facing a European Commission antitrust action over its European pricing and purchasing and playback restrictions and so the EMI deal allowed it to claim interoperability without having to license its Fairplay DRM to other companies (Rosenblatt, 2007a). Although Steve Jobs hailed EMI’s move as ‘the next big step forward in the digital music revolution’, the bigger companies, Warner, Universal and Sony, did not immediately follow their lead.

Indeed, Warner’s announcement in May that they would be selling WMA DRM encoded music on Myspace – a potentially significant market that could rival iTunes - suggested that the major companies were still committed to keeping DRM (Rosenblatt, 2007b). This situation was complicated again, however, by Amazon’s announcement the same month that it would soon begin selling music taken from EMI and independent labels. Their decision to use the consumer-friendly MP3 format and sell DRM-free music was clearly based upon the realisation that this was their only hope of making an impact in the market and challenging iTunes but it also created a problem for the remaining majors. Amazon’s customer base and marketing ability make them a very important retailer and the potential revenues of joining their scheme are huge, but that would necessitate a compromise over DRM (Rosenblatt, 2007c). Either way DRM will survive in one form or another as subscription services depend upon it whilst digital fingerprinting and watermarking are seen as a growth area and one solution to P2P piracy in allowing the industry to track files back to specific purchasers.

Competitive economic pressures, however, are impacting upon the model of digital user management that the music industry had established. The lure of increased revenue remains strong but so too does the desire for the benefits they see DRM as offering. The outcome of this struggle is important as these developments are being closely watched by other entertainment industries. Cinema, television and print are beginning to experiment with digital delivery and increasingly see the future as lying with digital download sales. They are keen to enter the download market as a new way to repackage and capitalise on their assets but they are determined to avoid the catastrophic loss of control of their product the music industry experienced with the ripping, copying and filesharing of unprotected copyrighted material. Although film and TV file-sharing is already a reality it has not become as popular as sharing music whilst DVD sales remain strong and strong DRM makes DVDs harder to copy. This places the film and TV industry in a better position to exploit the download market and they are currently looking for the most secure way to do this. As a result they are monitoring the music industry’s use of DRM-secured product and DUM-secured consumption as a possible business model. Whatever the outcome in the music industry, therefore, it is very likely that digital user management will be a ubiquitous feature of our digital entertainment and enjoyment in the future.


Notes

1. To take one example, the 9 CD set, The Complete Stax-Volt Singles, 1958-68 comes in a large box with an 80 page booklet and contains 244 songs, all for about £78. On iTunes - at 79p a song and without the accompanying box, CDs and book and with reduced production, distribution and retailing costs - this would cost £192.76.

2. Private communication: email reply by Michele Hambridge, UK Patent Office Policy Officer, to question concerning the legality of copying purchased CDs for back-up purposes (19th June 2006).

3. On Apple’s iTunes, for example, information about user restrictions is difficult to find. The limitations are not advertised and the location of the information page is not obvious. The ‘help’ menu gives you access to the itunes and music store ‘service and support’ web page and from there you can navigate to a ‘customer support’ page which, when searched, finally provides the basic information about file types, supported PMPs and DRM restrictions. On many other stores specific DRM limitations for songs are not explained prior to purchase.

4. The name originates from his release, aged 15, of the DeCSS software which decodes the content scrambling system (CSS) DRM used for DVD licensing enforcement. This led to his prosecution in his native Norway for computer hacking in 2002 for which he was twice acquitted in 2003.


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http://www.microsoft.com/windows/windowsmedia/forpros/drm/faq.aspx

Wray, R. (2007) ‘Warner chief vows to protect copyright on digital music’, in The Guardian, 15th February, at: http://business.guardian.co.uk/story/0,,2013165,00.html